The Man Who Solved the Market: How Jim Simons Launched the Quant Revolution by Gregory Zuckerman. This book is an easy ‘book of the year’ recommendation. The storyline is a mathematical whizkid recruiting talented mathematicians and scientists in building a successful investment firm.
Simons went to MIT in 1958, obtaining a mathematics Bachelors, then a PhD at UC Berkeley also in mathematics PhD at the age of 23. During the cold war Simons began working for the NSA in 1968 breaking Soviet encryption. Simons won the Oswald Weblen Prize in Geometry in 1976. Likewise he later became chair the Math department at SUNY at Stony Brook from 1968 to 1978. He began developing a talent for recruiting high performing, well respected mathematicians away from Ivy League schools.
Simons is widely recognized for establishing pattern recognition, development of string theory, and developed the Chern–Simons form. His efforts combining geometry and topology with quantum field theory has paid off handsomely. At the same time, Gregory serves four keys lessons for anyone striving to achieve success.
Lesson #1: Believe in yourself
Yet to the surprise of many, Jim left academia in 1978 to launch his investment firm. Here is where James shines: establishing a firm by believing in yourself. Chiefly hiring noted mathematicians James Ax, Sandor Strauss, Leonard Baum, Elwyn Berlekamp, Robert Mercer, and noted programmer David Magerman to join him was the bedrock of his firm. Gregory writes about the upbringing of key players in the book to provide just enough insight to what makes mathematicians and scientists tick.
Simons understood that bringing very intelligent people to his company would continue to build a foundation for success. Even Jim’s competition would shortly change markets:
One programmer, Jeffrey Bezos, worked with Shaw a few more years before piling his belongings into a moving van and driving to Seattle, his then-wife MacKenzie behind the wheel.
Page 124
The Man Who Solved the Market is an excellent book which reinforces the notion to surround yourself with smart people. Along this path, his company dealt with his own bad behaviors while also managing the motivations and decisions of those he hired. From time to time, these talented teams caused friction. Name an organization that is immune from this.
Lesson #2: True success is not an overnight gimmick
Although society expects little today by the way of grit and success must be immediate. On the contrary, Simons and his team created, tested, and then re-created models over a twenty year span.
Furthermore, Simons understood historical financial big data would better tune their prediction models. The longer tail provided the math quants a tested, fine tuned approach in establishing new success whose by-product was large sums of money.
Lesson #3: Moon shots
Jim’s teams worked hard together. They worked tirelessly to dream big and establish new rules in financial investing. This approach is a foundation for many successful companies and organizations. In fact, his teams shared insights to improving model outcomes. Part of the intrigue was Jim’s approach to hire talent with no previous financial experience.
Lesson #4: Applying data patterns
When you successfully establish data patterns and trends for financial markets, applying algorithms to different data sets seems not very difficult. Robert Mercer chose to contribute donations to Ted Cruz and later Donald Trump. Mercer in fact, was the largest single donor to Trump in 2016. Mercer’s purchasing of Breitbart News Network brought Steve Bannon into his sphere of influence, assisting in the Brexit campaign. Mercer even recommended Trump hire Steve Bannon and Kellyanne Conway.
Mercer family played bigger role in 2020 election than thought, giving nearly $20 million to dark-money GOP fund
To no surprise, Mercer found opposition within the firm. David Magerman wrote a Wall Street Journal OpEd eventually resulting in his firing. Mercer’s daughter is today co-owner of Parler. Forgo your opinions here, data patterns and trends are the secret sauce.
In conclusion, The Man Who Solved the Market is remarkable in many ways. Jim Simons certainly invented an amazing company. The quants he hired built the widely successful Renaissance Technologies.
TED | The mathematician who cracked Wall Street
Wealth Insider | The insane story of the greatest trader of all time
SF State University | Mathematics, Common Sense and Good Luck